Ofcom will not impose price control on fibre for 11 years

News

In effect, the UK regulator is supporting BT’s pledged £12 billion upgrade to national infrastructure ahead of its review next March.

Speaking at the virtual FTTH Council Europe event, Ofcom’s newish CEO, Dame Melanie Dawes, said investors needed certainty to encourage the huge investment necessary upgrade the UK networks from copper to fibre.

She noted, “We recognise there must be a compelling investment case. Shareholders and fund managers have plenty of choices over where to put their money”.

Dame Melanie also said, “We don’t expect to introduce cost-based prices for fibre services until at least 2031,” and confirmed Ofcom will not intervene in the market to discourage investment in any way.

Regulatory certainty

Greg Mesch, CEO of CityFibre, one of the UK’s altnet fibre providers, said, "”As a business investing billions of pounds into full fibre infrastructure across the UK, we welcome any offer of long-term regulatory certainty such as that announced by Ofcom today. Given the long payback of digital infrastructure, this news provides all investors with the confidence to continue to invest.

He added, "It is critical however that the spark of infrastructure competition, which has unleashed full fibre investment from incumbents and new entrants alike, is both encouraged and protected. It is only a healthy competitive market that will ensure full fibre reaches every corner of the UK in the shortest possible time.”

The next big regulator milestone is due in March, when Ofcom is to publish a review of the UK wholesale telecoms market, which will set the ground rules for the sector for the next five years.

This is particularly key for BT and its semi-detached access wholesale unit Openreach, which are subject to strict price controls and obliged to treat fairly and equally all other service providers wishing to deliver services via the BT infrastructure.

A gift to BT?

Not everyone is happy. Tristia Harrison, CEO of rival service provider TalkTalk, was reported in the Financial Times [subscription needed] saying that BT has been handed “almost total pricing freedom for a decade or more” at a time when affordable broadband access was more important than ever.

Last week the Tory government reneged on its its election promise to connect the entire country to gigabit-speed broadband by 2025 and said only £1.2 billion of the £5 billion support promised to help reach the most difficult areas to bring fibre coverage to will be made available during this Parliament.

The onus has been put on commercial providers, an apparently retrograde step for most rural dwellers.